Will the cost of living go down in the UK?

What is the UK's cost of living crisis? 

The UK's cost of living crisis is a financial restraint that is squeezing an ever tightening grip on households across the country, affecting not only the price of the goods and services we all buy, but also the amount we earn. 

Officially, according to the Institute for Government, the cost of living crisis refers to ‘the fall in ‘real' disposable incomes (that is, adjusted for inflation and after taxes and benefits)... caused predominantly by high inflation outstripping wage and benefit increases and has been further exacerbated by recent tax increases.'

Put simply, people across the UK are not earning enough money to afford what they need for day-to-day life, from energy and fuel to food, and as inflation continues to rise, wages are remaining largely the same as before.

What is causing the cost of living increase?

The course to recovery from the global Covid-19 pandemic has had many bumps in the road, with factors such as lockdowns and restrictions on travel having a huge negative impact on the manufacturing, importing and exporting of goods, employment figures and economies in general around the globe. 

In early 2022, the Russian invasion of Ukraine exacerbated the stress on the global economy further, with responses and reactions to the invasion - and subsequent war - in Ukraine affecting many vital industries and the distribution of fuel, energy and food.

In turn, these global events have driven prices for such goods and commodities upwards, with the additional cost being passed on to the consumer. These increased costs have largely not been met with increased wages. 

Collectively, these are the main causes of the UK's cost of living crisis. 

How are households affected? 

With costs rising and wages remaining largely the same, the vast majority of households across the UK - especially poorer households which are unable to absorb increasing costs as effectively as richer ones - are likely to have been, or will soon be, affected by the cost of living crisis. 

Thanks to the interest increases, many homeowners - especially those who are not protected by the terms of a fixed rate mortgage - can expect their monthly mortgage payments to increase too. 

Meanwhile, those who rent their homes are likely to see an increase in their rent too, as landlords look to absorb their own cost of living increases. 

Additionally, as the crisis continues, along with the rise in inflation, all households can expect to see a continued increase in the cost of energy, food, fuel and more, with even bills for services such as broadband also set to grow.

Is any cost of living help available?

Thankfully, in reaction to ever-increasing bills and costs that everyone is having to somehow cope with, the UK government has announced a series of cost of living payments that will be provided to help households pay for the goods and services they need. 

There are three different types of payment, which will be provided based on individual circumstances. These payments are: 

• Cost of Living Payment - available to those who get a qualifying low income benefit or tax credits
• Disability Cost of Living Payment - available to those who get a qualifying disability benefit
• Pensioner Cost of Living Payment - available to those who are entitled to a Winter Fuel Payment for winter 2022 to 2023

These payments are to be paid in instalments, and eligible people will receive them automatically. Payments are not taxable, and will not affect any existing benefits or tax credits.

For full details of these payments, visit the government website.

Can you do anything to reduce your cost of living?

Unsurprisingly, with prices, inflation and interest rates going upward at a rapid rate, the vast majority are of course looking at how they can bring their monthly, weekly, and even daily, cost of living down. 

Some of the ways that you can reduce your living costs include saving money where possible, to counterbalance and be prepared for any future increases; saving money on food shopping; looking at ways to use energy more efficiently; and more: 

How to save money fast on a low income

In the cost of living crisis, it's likely you're looking at ways to save some money where possible - especially if you're in a household with a low income. Some of the best tips on how to save money fast on a low income are to: 

• Set an amount you wish to save, and a time frame in which to save it
• Budget all spending, to keep track of your overall costings 
• Eat out less, cook at home more 
• Look into selling any unwanted and unused items 
• Audit any subscriptions (I.e Netflix and Amazon) you have, and remove those you do not need or use
• Limit spending, where possible, overall 
• Set up automated savings, to help save money before you spend it!

How to save money on food shopping

Of course, we all need food. And whether you live on your own, as a couple or have a large family, food is something we all have to spend money on regularly. With this in mind, we're all looking into how to save money on food shopping. 

Thankfully, there is plenty of advice out there from trusted, knowledgeable sources such as ‘Which?', who's tips for saving on your food shop include: 

• Making packed lunches when suitable
• Switching supermarkets and trying own-brand products
• Buying in bulk
• Reducing waste and checking for use-by vs best before dates
• Planning every shop, to buy only what you need
• Avoiding more expensive convenience stores
• Considering cashback or reward credit cards to pay for shopping

Energy and the cost of living

Similar to our food requirements, every household needs some form of energy supply, whether its gas, electricity or oil, to help keep us warm, clean and to power the various things we have in our homes. 

Unfortunately, as already mentioned, the cost of energy is going up rapidly, at a time when we'll all soon be needing heat, light and power more, not less. 

With this in mind, you may be wondering about a few little tips and tricks we so often hear about, such as if using a smart meter saves money, or whether turning off radiators saves money too. 

Well, according to SmartEnergyGB, smart meters - when used correctly - can help households save money on energy bills, by helping them to keep track of what they use and when. Turning off some radiators, especially in unused rooms, can certainly help you save some money, though there are plenty of other small things you can do, such as those outlined by Plumb Nation, that will also help. 

Is the cost of living expected to go down soon?

While experts suggest that the cost of living should start to reduce sometime in 2023, there is unfortunately no telling how long the rate of inflation, interest and the cost of commodities will remain high. 

This is largely due to the unpredictability of the global markets and economy, which will continue to be affected by global events such as the Ukraine war, and how quickly industries can recover from the blows they have taken in recent years.

How will the cost of living in the UK affect house purchase/sale? 

The cost of living crisis is affecting everything. This includes the housing market. As inflation and interest rates have risen, so have mortgage rates, potentially pricing-out those who were looking to buy a new home. 

Additionally, as people have to pay more for what they currently have and use, and that's while wages remain the same as before, there is less opportunity to pay more for a mortgage, or even to cover the costs associated with moving house. 

This means that, over the coming weeks and months, we are likely to see an impact ofthe cost of living in the UK on house purchases and sales across the country. 

Currently looking to buy or sell a house?

If you're looking to buy or sell a house during the cost of living crisis, it is important to ensure that you're getting the help you need for your property transaction, to avoid any potential problems and any additional costs that may be associated with such issues. 

At Homeward Legal, we understand the importance of expert knowledge and quality service you can trust, especially during difficult times. That's why we're here to provide the residential conveyancing services needed to make buying or selling a house as simple, efficient and stress-free as possible - and all at a fair, transparent price.